Revenue increased by almost 18 percent, but overall profit declined for Transat in the first quarter, with the travel company citing the (now resolved) threat of strike by flight attendants, fierce competition, and supply chain challenges as factors contributing to a $61 million net loss. At the same time, record customer deposits for future travel (+14%) have been achieved.

The overall financial result in its latest quarter compared with a net loss of about $56.6 million a year ago, though revenue for the period ended Jan. 31 amounted to $785.5 million, up from $667.5 million a year prior.

“Transat’s first-quarter results reflect sustained demand for leisure travel. Revenues grew 17.7% year-over-year, driven by a solid traffic increase,” said Annick Guérard, President and CEO of Transat,” who noted a “solid” uptick in traffic to sun destinations.

But she added, “the persisting speculation of a strike by flight attendants starting last November clearly affected bookings and yield for the winter season, and we are pleased that the adoption of a new collective agreement in late February removed this uncertainty.”

Guerard also said that costs related to temporary plane leases due to engine issues and lower profit margins caused by “heightened consumer price sensitivity … as well as fierce competition” in Toronto further hurt earnings. Air Transat’s seat capacity ramp-up of 25% exceeded its passenger increase of 20%.

Outlook

According to Transat, early trends for the summer season indicate bookings and pricing conditions that are largely in line with the same period last year. However, as the Corporation does not foresee the same uplift in yields that was exhibited throughout the summer season last year, it will remain proactive in managing costs under its control, while actively seeking to mitigate the structural cost increases affecting the industry.

Given the current operating environment, the Corporation revised its fiscal 2024 capacity expansion plans to 13%, versus 19% previously.